Takealot and Makro’s invisible threat

South African e-commerce companies like Takealot, Bash, Bob Shop, and Makro face increased competition from international competitors like Shein, Wish, and Ali Express.

These international companies have no physical presence in South Africa, but people spend billions with them and ship the products to their door.

Parcelninja founder Justin Drennan highlighted this threat in a presentation in 2021 about the changing online shopping landscape in South Africa.

He pointed out that many top e-commerce apps in South Africa were for international services, especially Chinese shops. The trend was accelerating.

Instead of addressing this competitive threat, the Competition Commission launched a Digital Markets Inquiry taking aim at Takealot.

International e-commerce companies have a big competitive advantage over their local counterparts as they do not have to adhere to local laws or pay local taxes.

The only significant disadvantage is shipping. Because many of the popular online shops are based in China, it comes with expensive shipping and long waiting times.

The inefficient Post Office provided local online retailers with a protective moat against fast and affordable shipping to South Africa when buying products internationally.

However, this has changed. Buffalo International Logistics created an easy way for Chinese e-commerce players to ship their products to South Africa.

The China-Africa online trade logistics service provider ships products in bulk to its sorting centre in South Africa and use local couriers to do fast last-mile deliveries.

Since it started in 2017, Buffalo integrated seamlessly with the South African customs system, the local banking system, and several express companies.

With a fleet of 300 self-owned transportation vehicles, it has established a fully self-operated cross-border e-commerce logistics and distribution service from China to South Africa.

There is so much demand for the service that Buffalo purchased a 25,000-square-meter sorting centre with a 6,000-square-meter bonded warehouse in October 2022.

It enabled the company to process orders more quickly and efficiently and provide a better service experience to South African online shoppers.

To give an idea of its scale, Buffalo ranked first in local customs clearance volume in South Africa over the last year, completing five times the overall clearance volume of DHL.

Buffalo has, therefore, taken over from the Post Office as a fast and affordable way for South Africans to get products from Chinese shops delivered to them.

The improved logistics have helped Chinese online stores like Shein to gain significantly more traction in South Africa.

Shein’s mobile app achieved the highest number of downloads in South Africa, beating popular apps like WhatsApp and TikTok.

Although it is challenging to establish the scale of online purchases from international stores in South Africa, it is definitely a sizeable chunk of the total market.

So, while the Competition Commission is taking aim at Takealot and local players like Superbalist, Makro, and Bash are focussing on each other, there is a silent player eating their lunch.

Local e-commerce players will be well-advised to keep an eye on Shein, Wish, and Ali Express. They may be South Africa’s biggest e-commerce companies in years to come.


This article was first published by Daily Investor and is republished with permission.

Now read: Superbalist beats Bash on delivery thanks to Takealot ties

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Takealot and Makro’s invisible threat